Euro to US Dollar (EUR/USD) Exchange Rate firms on US GDP data

The Euro recovered some ground against the US Dollar on Thursday after data showed that the world’s largest economy contracted in the first quarter of 2014.

According to the Washington based Commerce Department, US GDP contracted by a seasonally adjusted annual rate of 1.0% in the first three months of the year.

The contraction is the first recorded in the USA since the first quarter of 2011 when it fell by 1.3%.

Economists had widely been expecting a contraction of 0.5%.

The data suggests that the harsh winter weather seen in the US at the start of the year had a far worse impact upon the economy than initially expected.

The exceptionally cold period caused consumers to avoid going to the shops, disrupted work on building sites and impacted upon the nation’s transportation network.

Despite the contraction economists are not forecasting a recession risk to the economy. Instead as the weather continues to improve areas impacted by the winter weather are expected to recover strongly over the coming months.

“The good news is that the first quarter is over, it was a difficult one for the US economy. I wouldn’t worry too much about the decline; it’s mostly driven by less construction spending and less inventory accumulation. This quarter should be a good one,” said a senior economist at Moody’s Analytics.

The Commerce Department is due to release another revised first quarter GDP estimate on June 25th.

Further losses for the ‘Greenback’ were restrained as a separate report showed that fewer American than expected filed for jobless claims benefits last week. The monthly range slipped to its lowest- level since 2007.

Further gains for the Euro were also held in check as expectations that the European Central Bank will introduce new monetary easing measures at next week’s eagerly anticipated policy meeting.